Winners and losers in precarious global market

Global total volume growth remains subdued for a second year running, setting it up to be among the three lowest in the last decade, writes Spiros Malandrakis, senior alcoholic drinks analyst at Euromonitor International.

The global drinks market is subdued and uneven, but craft beer and non-Scotch whiskies are performing well (Photo: db)

Beyond the usual Western European patient that ended the year flat-lining, the Chinese slowdown – at just 1.2% growth – is now the most sobering growth figure coming out of the country since the 90s.

Russia’s on-going macro and geopolitical travails – culminating in a nigh apocalyptic decline of 6% for 2014 – weigh heavily on the global landscape.

But as the seemingly unstoppable emerging market engine begins to stutter and stall, North America shifts back into focus with total volume growth for the year at 1%, up from a poor 0.3% in 2013, if still some distance from the exuberance of the past.

Winners and Losers

Geographic diversification – or lack thereof – remains one of the defining factors determining top line success or failure. It is within that context that categories like Cognac and vodka suffered disproportionally due to their over-reliance on a single market or region, with China and Russia exerting their immense gravitational pull to drag their global growth rates lower.

With Cognac registering total volume growth of just 0.4 % and vodka declining by 5%, it was second-tier markets beyond their core strategic bastions that provided, or could yet provide, some respite. For example, Cognac’s belated shift of focus towards the US and mass market varieties has already planted the seeds of an American renaissance for a category otherwise trapped in a gilded cage of luxury and nouveau rich extravagance.

On the other hand, the on-going pivot towards brown spirits and select varieties within the whisky stable underscores the still untapped opportunities even in otherwise terminally mature markets.

Heritage, authenticity and craftsmanship solidified their position as key drivers for whiskies but some fared better than others. Bourbon, Irish and Japanese whiskies – witnessing spectacular total volume rates of 5%, 8% and 7% respectively – stole the limelight from Scotch, which was eclipsed in terms of innovation and relevance to the millennial demographic alongside key Scotch distillers’ overoptimistic assessment of the emerging market mantra.

There were winners and losers across all categories. In beer, beyond the ever-rising tide of craft offerings across the globe, imported premium lager, ale and non-alcoholic variants proved to be the star performers at the same time that imported mid-priced lager suffered the most – a reiteration of the relevance of polarisation, craftsmanship, diversification and exoticism as the key drivers across the alcoholic drinks landscape.

Cider, seemingly insulated by recessionary forces, macroeconomic volatility or even evolving drinking patterns, continued enjoying solid total volume growth of nearly 9% on a global level, as the western European core markets gradually take a back seat to the skyrocketing North American success story.

Lastly, RTDs reiterated their dominant position over retreating high-strength premixes. Even though Bud Lime-A-Rita’s explosive trajectory in the US got inevitably reacquainted with gravity, strong growth in Asia Pacific secured an overall healthy performance of 2.7% for the overall RTDs/high-strength premixes category.